Kiwisaver: Several welcome changes
24 August 2006
Several welcome changes but arm-twisting not appropriate for KiwiSaver
Changes to the KiwiSaver scheme announced today are generally positive, according to Business NZ.
Chief Executive Phil O' Reilly says the later starting date, tax changes and ability to divert KiwiSaver funds into mortgage repayments are useful additions to the scheme.
"Business NZ expressed concern at the outset since the scheme arrived almost as a fait accompli, without debate about the best kind of superannuation system for New Zealand. If it is to make a positive contribution to savings security, changes such as those announced today will be largely helpful.
"One exception is the recommended change to allow the minimum contribution to be made up of both an employee's and employer's contribution. This change, in combination with the relatively high threshold of 4% of income, could put undue pressure on employers to pay into employees' schemes.
"Business NZ has always advocated that employers should not be subject to compulsion or pressure to pay for employees' retirement savings, as their support for the scheme is vital, and the scheme should not suffer negative outcomes as a result of such pressure.
"Any changes that encourage arm-twisting over co-contributions would not be a healthy addition to the KiwiSaver scheme and Business NZ will present its concerns regarding this to the select committee."